ROSS vs SCANNELL

Facts:

Respondent William Scannell, a businessman, was a client of Appellant Atty. Lawrence Ross in
a case involving Scannell's purchase of property. Both agreed that the payment of attorney fees
will be that any damages awarded over and above costs incurred will be shared by both, with
Atty. Ross receiving 1/3 share. Both also agreed that they will share on the same proportionate
basis any commission, finder's fee or other similar fee which Scannell will receive in connection
with the sale of the subject properties.

Atty. Ross handled Scanell’s Knight case, wherein Scannell entered into negotiations with
Wayne B. Knight with Atty. Ross' clients and law partner as joint venture partners for the
purchase of a parcel of land in Klickitat County. The land purchase was not completed due to
the sellers' refusal and/or inability to clear title to the land and sell to the joint venture, thus
ended the proposed joint venture. Scannell filed an action against Knight and the trial court
ruled in favor of Scannell and granted specific performance for 960 acres of the 1,410 originally
contracted for, damages were awarded in the amount of $32,499, plus the return of the $2,500
earnest money (plus interest) originally deposited by Scannell.

In October 1978, Scannell entered into negotiations for the sale of a portion of the property
obtained in the Knight litigation. Ross was privy to those negotiations and learned that his client
was about to realize a substantial profit upon the resale of the property.

Scannell offered Ross a one-third equity participation in the property with full credit for fees of
one-third of the damages which had been applied toward the purchase price. At this time Ross
informed Scannell that he was entitled to one-third of the profits that Scannell might derive from
the sale, as well as one-third of the damages. Ross continued to insist upon these profits even
though, as he admitted, the contingency fee agreement letter that he drafted made absolutely
no mention of profits. Scannell disputed that one-third of the profits from the sale of the land
should go to Ross, absent further contribution from him toward the purchase price of the
property.

Scannell experienced difficulty in obtaining a contract for the conveyance of the property in
accordance with the judgment requiring specific performance and Mr. Knight refused to grant
necessary easement across adjoining property. In view of their dispute over fees, Ross did not
represent Scannell in clearing up this matter. Thus, in December 1978 Scannell had still not
obtained title to the property.

Scannell reluctantly paid Ross' unreimbursed costs and retained the services of the law firm of
Johnson, Lane & Gallagher who after several post trial hearings obtained a properly executed
contract with an easement. Ross testified that the services provided by the new law firm were a
part of the litigation and he would have performed them if there had not been a falling-out with
Scannell with regard to the fees.

Shortly after Scannell refused to agree to give Ross one-third of any profits from the future sale
of the property, Ross filed a claim of attorney's lien over the property involved in the Knight
action with the Pierce County Superior Court with the admitted purpose of clouding title to the
property.

At that time Scannell had entered into an agreement with prospective purchasers to sell 790 of
the 960 acres. Due solely to the cloud on the title caused by Ross' unadjudicated claim of
attorney lien, Scannell was unable to deliver marketable title to the prospective purchasers and
hence, canceled the transaction.

Ross sued Scannell in Klickitat County to collect the contingent fee and foreclose the attorney's
lien. Scannell counterclaimed for damages resulting from the loss of sale and for slander of title.

Issue:

Whether an attorney can recover fees based on a contingency fee contract if, prior to full
consideration of the contingency, the attorney ceases to render the required legal services for
his client.

Held:

An attorney may not recover on the contract but must seek recovery of fees on the theory of
quantum meruit. (a reasonable sum of money to be paid for services rendered or work done when the amount
due is not stipulated in a legally enforceable contract.)

The rule is that, where the compensation of an attorney is to be paid to him contingently on the
successful prosecution of a suit and he is discharged or prevented from performing the service,
the measure of damages is not the contingent fee agreed upon, but reasonable compensation
for the services actually rendered. Here, if Ross is entitled to attorney fees, the measure of
those fees is not the contingent fee agreed upon but the reasonable value of the services
rendered.